Leadership role increasingly important on today’s farms

There are aspects of managing farms today that didn’t appear on the radar screen in years past.

One such aspect is human resource management. It wasn’t that long ago when the broader function of managing human resources on a farm did not warrant a lot of attention.

This has changed. Even for more modest operations, the importance of tending to a farm’s human resources (both employees and family members) has heightened.

People only have so much time and there is no end of things to do.

The leadership function within family farms is one of the next areas of management focus that many farm businesses either already do, or will soon, need to look at. More complex farms are going to have to address leadership within their businesses and families. But, in my opinion, even less complex farms will benefit from clarity on how leadership is applied within the business.

I find that I’m much more frequently involved in discussions with farm families about leadership. The topic definitely arises when I’m involved in industry-type meetings.

A key question is determining what leadership means to the business and how it is or will be defined. The leadership function within a farm can be broad and wide-ranging or narrow and specific.

Leadership is not easily understood in most farms, largely because it hasn’t been openly considered in the past and therefore, no context or history exists to apply to current discussions.

In business, leadership is provided by the chief executive officer, or CEO. I thought it might be helpful to look at key aspects of the role of a CEO in a business in general.

Clearly, there is a correlation between the role and the leadership function. However — and especially for farm businesses — I think it’s less about the title and more about the role.

A lot has been written about a CEO’s role. One piece I found identified four key things that CEO’s must do in their role:

  • Educate themselves;
  • Set the vision;
  • Create the strategy;
  • Watch the cash.

I think these four elements align nicely with the role of a leader, or leaders, in a farm family business.

There’s generally an acceptance that the rate of change in farming is not going to let up. Information is one method of keeping abreast of change. Knowledge is information and it can be used to advance the management of a business. Farm families in business together must make a lifelong commitment to education; where the education involves much more than attending farm shows.

I like to think of vision in terms of the future. Key questions include:

  • What does it look like for your farm?
  • What are you and your family working toward?
  • Are you all on the ‘same page?

The next role, create a strategy, can be more simply defined as “what’s the plan”.

The question becomes how you are going to get to your vision. There needs to be a plan. It can be detailed and complex, or simple and straight forward. It needs, though, to be your plan and it needs to be written down and communicated within the family and business.

Watch the cash. This role requires that businesses are properly capitalized and financed. The financial structure and performance of a farm should be aligned with the vision and should form a key part of the plan. Other than selling assets or winning the lottery, cash can only come from profit or borrowing. Loans must be repaid so ultimately, watching the cash correlates to ensuring that the farm makes money.

The leadership function can also be effective in transition planning situations. A senior family member can take on the leadership role and within that responsibility, work to ensure the transfer of management and ownership to the incoming generation. There is opportunity for the next generation to assume some responsibility and autonomy, creating a structure that can endure the full transition when the senior member fully retires. And importantly, to create a model of leadership within transition that can be applied to future generations.

Who in your business is going to provide the leadership to these important functions?

Terry Betker, P.Ag, is a farm management consultant based in Winnipeg. He can be reached at 204-782-8200 or terry.betker@backswath.com.

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